Comparing the DSGE model with the factor model: an out-of-sample forecasting experiment

In this paper, we put DSGE forecasts in competition with factor forecasts. We focus on these two models since they represent nicely the two opposing forecasting philosophies. The DSGE model on the one hand has a strong theoretical economic background; the factor model on the other hand is mainly data-driven. We show that by incooperating large information set using factor analysis can indeed improve the short horizon predictive ability, as claimed by manyresearchers. The micro founded DSGE model can provide reasonable forecasts for inflation, especially with growing forecast horizons. To a certain extent, our results are consistent with the prevailling view that simple time series models should be used in short-horizon forecasting and structural models should be used in long-horizon forecasting. Our paper compareds both state-of-the art data-driven and theory-based modelling in a rigorous manner. --DSGE models,factor models,forecasting,forecastevaluation

In an Attempt to Introduce Long-range Interactions into Small-world Networks

Distinguishing the long-range bonds with the regular ones, the critical temperature of the spin-lattice Guassian model built on two typical Small-world Networks (SWNs) is studied. The results show much difference from the classical case, and thus may induce some more accurate discussion on the critical properties of the spin-lattice systems combined with the SWNs.Comment: 4 pages, 3 figures, 18 referenc

Drifts and volatilities under measurement error: Assessing monetary policy shocks over the last century

How much have the dynamics of U.S. time series changed over the last century? Has the evolution of the Federal Reserve as an institution over the 100 years altered the transmission of monetary policy shocks? To tackle these questions, we build a multivariate time series model with time-varying parameters and stochastic volatility that features measurement errors in observables. We find substantial changes in the structure of the economy. There is also large variation in the impact of monetary policy shocks, but the majority of this variation is driven by changes in exogenous volatility

Optically-Nonactive Assorted Helices Array with Interchangeable Magnetic/Electric Resonance

We report here the designing of optically-nonactive metamaterial by assembling metallic helices with different chirality. With linearly polarized incident light, pure electric or magnetic resonance can be selectively realized, which leads to negative permittivity or negative permeability accordingly. Further, we show that pure electric or magnetic resonance can be interchanged at the same frequency band by merely changing the polarization of incident light for 90 degrees. This design demonstrates a unique approach to construct metamaterial.Comment: 15 pages, 4 figure

Entropy and Its Quantum Thermodynamical Implication for Anomalous Spectral Systems

The state function entropy and its quantum thermodynamical implication for two typical dissipative systems with anomalous spectral densities are studied by investigating on their low-temperature quantum behavior. In all cases it is found that the entropy decays quickly and vanishes as the temperature approaches zero. This reveals a good conformity with the third law of thermodynamics and provides another evidence for the validity of fundamental thermodynamical laws in the quantum dissipative region.Comment: 10 pages, 3 figure